Eurozone joblessness at record high of 11.8%

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A woman pleaded for money in Milan on Tuesday. Many economists expect the eurozone to remain in a recession through winter, with unemployment possibly hitting 12.4 percent.

By Melissa Eddy and David Jolly
New York Times
January 09, 2013

BERLIN — Unemployment in the eurozone rose to a record in November, according to data released Tuesday that also showed that troubles in the 17-nation currency bloc are straining Germany, its strongest member.

The jobless rate was 11.8 percent, up from 11.7 percent in October, according to Eurostat, the European Union’s statistics agency. Eurostat estimated that 18.8 million people in the eurozone were unemployed in November — 2 million more than a year earlier.

Over the past three years, Germany has provided momentum to the European economy as strong exports protected it from the crisis.

But on Tuesday, the Federal Statistics Office in Berlin said German exports in November declined 3.4 percent and imports slid 3.7 percent from a month earlier. The weakness narrowed Germany’s trade surplus to $19 billion.

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German factory orders also fell in November amid weak demand from outside the euro area, the Economy Ministry said Tuesday. Orders, adjusted for seasonal swings and inflation, slid 1.8 percent from October, when they had jumped 3.8 percent.

“The November numbers are not a one-off but an extension of the current trend of weakening exports,’’ Carsten Brzeski, an economist at ING, wrote in a research note on Tuesday. He said that German exports had fallen about 4 percent since May.

“Today’s data confirmed our view that exports should have turned from driver of growth into drag on growth,’’ he wrote.

A separate report from Eurostat showed retail sales fell 2.6 percent in November from a year earlier, though they gained 0.1 percent from October.

Gilles Moec, an economist at Deutsche Bank in London, said the data were consistent with expectations that the eurozone economy would remain in recession through the winter, with the unemployment rate possibly rising to as high as 12.4 percent.

“We’re still far below the level of growth that would stabilize the labor market,’’ he said.

But he added that the commission’s report on economic sentiments, as well as recent surveys of purchasing managers, suggested that the downturn in the manufacturing sector had ‘‘bottomed out,’’ making possible a return to growth later in the year.

“External demand seems to be holding up better than we had thought,’’ Moec said. ‘‘Now we are to a large extent dependent on what happens in the United States,’’ he added, referring to the negotiations on government spending.

Europe received a vote of confidence from Tokyo on Tuesday when the finance minister, Taro Aso, said that Japan would buy bonds of the European Stability Mechanism, as the eurozone bailout fund is called, as well as sovereign debt in the currency zone.

Attacking joblessness may require governments to ease austerity measures that many economists, including some at the International Monetary Fund, say might have gone too far.

In France, President Francois Hollande has vowed to turn around the flagging labor market. According to Eurostat, unemployment there was 10.5 percent in November.

Eurostat said Spain, which is suffering from the collapse of a real estate bubble and the effect of a raft of austerity measures, had the highest unemployment rate in the bloc, at 26.6 percent. Greece was next at 26 percent, according to data released in September. The lowest rates were in Austria, at 4.5 percent; Luxembourg, at 5.1 percent; and Germany, at 5.4 percent.

Youth unemployment in the eurozone continued to grow, with 5.8 million people younger than 25 classified as jobless in November, up 420,000 from a year earlier.

The Greek prime minister, Antonis Samaras, who was in Berlin for talks with Chancellor Angela Merkel on Tuesday, singled out youth unemployment as one of the biggest challenges Greece faces in reviving its economy. But, he said at a news conference before meeting the chancellor, overall he is feeling positive.